The southern African country needs to clear its arrears before it can raise more loans needed to rebuild an economy hobbled by the misrule of former President Robert Mugabe.
Zimbabwe will clear almost $2 billion of arrears with the African Development Bank and the World Bank by October 2019 and seek help from the world’s most-industrialized nations known as the Group of Seven, Finance Minister Mthuli Ncube said.
The southern African country needs to clear its arrears before it can raise more loans needed to rebuild an economy hobbled by the misrule of former President Robert Mugabe. Its total debt is $16.9 billion, while external debt amounts to $7.4 billion, $5.6 billion of which is arrears, Treasury documents published earlier this month show.
“The AfDB and World Bank have preferred creditor status, which means they ought to be cleared first,” Ncube said in an interview Thursday in the capital, Harare.
The nation’s arrears total $680 million with the AfDB, $1.3 billion with the World Bank and $308 million with the European Investment Bank. Zimbabwe is paying nine per cent on its arrears with the World Bank, said Ncube, 55, the former vice president of the AfDB who was appointed as finance minister last month. He presented proposals for clearing the nation’s debt with the lenders at the IMF and World Bank Group annual meetings in Bali, Indonesia last week. Members of the Group of Seven nations “want to help us, they are very warm towards us,” he said.
After settling the World Bank and AfDB arrears, Ncube wants to engage with the Paris Club of creditor countries, to which Zimbabwe owes about $2.8 billion, and he will lobby for special assistance similar to that the World Bank and IMF give to heavily indebted poor countries or for complete debt forgiveness, he said.
The Oxford-trained economist who starts work at 7 a.m. and leaves the office at midnight, will lobby for debt clearance at the World Bank’s mid-term review in Livingstone, Zambia next month.
Ncube wants to reduce Zimbabwe’s budget deficit to a “single digit” over the next two years, saying the country is “living beyond our means.”
In a bid to become a middle-income economy by 2030, Ncube said the country wants to attract $10 billion of investment in the next two to five years.
“That needs to come in order to create jobs,” he said. The country’s jobless rate is 90 per cent.
Foreign-exchange shortages and austerity measures have left consumers facing long lines for everything from fuel to bread and sugar, and sent prices soaring. Zimbabwe accepts the dollar, euro and rand as legal tender and introduced its own bond notes amid a dearth of hard cash, but their value has plunged.
“Because of low confidence in the banking sector, foreign currency is by passing the banking system,” Ncube said. “That is why you can’t find dollars. So, the idea is ‘how do we get dollars back in the system?’ We are going through this transitional phase.”